Saudi Central Bank sets new rules for APR calculation

The APR is a fixed interest rate for an entire year and offers a complete picture of what consumers will pay for a loan.  

RIYADH: The Saudi Central Bank, also known as SAMA, on Wednesday issued new rules to calculate the annual percentage rate to improve disclosure practices.
The new directives aim to standardize methods for determining the APR of financial products for individuals, according to a press note.
The APR is a fixed interest rate for an entire year and offers a complete picture of what consumers will pay for a loan.  
Furthermore, provisions related to the methodologies for APR calculation for consumer finance products and the determinants for the cost of financing have been made.
A periodic review and update of the APR calculator offered by financing institutions is required amid the recent changes.
The new rules will take effect in 90 days from Nov. 8.
The announcement comes after the apex bank opened a public consultation in August.
It invited stakeholders and the public to send suggestions and observations on the proposal via its public consultation platform.
This follows SAMA’s decision to raise its key interest rates by 25 basis points on July 26, mirroring the Federal Reserve’s quarter-percentage-point increase in US interest rates.